Fixing Food Stamps with Blockchain

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journey foods food blockchain SNAP

Why should food stamps/SNAP be treated like blockchain? 

Abstract: Today, only 55% of food-insecure people qualify for food stamps in the United States, and those who are eligible are still limited in the kinds of foods they can purchase and where they can shop. We started a deep dive into the possibility of using blockchain to redistribute costs to better food and streamline our broken state system.

Today, 1 in 9 people struggle with hunger in the United States. To address this food security problem, the government created numerous social welfare programs – from Child Nutrition Programs to Food Distribution Programs, to the Supplemental Nutrition Assistance Program (SNAP). 

“More than 80% of all SNAP/food stamp benefits go to households with a child, senior, or disabled person.”

A major component of the SNAP program is food stamps, which are also referred to as SNAP benefits. Today, only 55% of food insecure people qualify for foot stamps, and more than 80% of all SNAP/food stamp benefits go to households with a child, senior, or disabled person. 

These benefits are distributed each month on a plastic card called an electronic benefits transfer (EBT) card, which works like a debit card, and participants can only purchase specific types of food for their household. We decided at Journey Foods, as a part of our, Food & Justice series to dive into Food Stamps and think outside of the box as the protections and resources of the program are always on the brink.

The following issues still exist within SNAP:

  • Program access states determine their own qualifications for SNAP, meaning that eligibility wavers across borders and underresourced or administratively strapped States fail to deliver to their residents.
  • Limiting the types of foods consumers can purchase – SNAP benefit users can only purchase specific kinds of foods, which restricts these consumers’ choices and often leads them to use their own money to buy non-SNAP approved items
  • Store eligibility requirements – Stores must meet specific requirements to be authorized for SNAP consumers, which limits the number of stores that these consumers can shop at
  • Adequacy of SNAP benefits – SNAP benefits do not take into account geographic prices of foods or cost variations associated with the age and nutrient requirements of household members. 

Now looking at these issues through a technology-focused lens, it’s interesting to brainstorm solutions using Blockchain

Blockchain is a decentralized record keeping technology, monitored by a network of computers, specifically transactions with cryptocurrencies such as Bitcoin. 

The “blocks” are made up of three pieces of digital information: 

  1. Information about the transactions such as date, time and dollar amount
  2. Information about who is participating in these transactions
  3. Information that separates each block from the other blocks (this is stored as a unique code called a “hash,” but we won’t get into the technical jargon here). 

While there are many advantages to blockchain, the most important is the increase in security and efficiency of transactions. Because a network of computers monitors and approves transactions, it is very difficult to hack or tamper with this information.

Other advantages include the transparency of this technology, decreased costs, and improved accuracy by removing human involvement in verification.

Now, if we dive back into the inefficiencies surrounding food stamps, many stem from a lack of a connected system to monitor who qualifies for food stamps – where they can use these stamps and what they can use them to purchase. It boils down to large administrative and state-wide problems. All of these issues could theoretically be addressed by introducing a blockchain system – right?  

“In 2019, about 36 million people received SNAP benefits, and they received, on average, $129.83 a month. The total benefits distributed totaled to around $56 Billion, and the costs of federal expenses and other costs associated with the program totaled to about $5 billion.”

Introducing blockchain technology could redistribute some of the $5 billion of administrative costs back to the beneficiaries. 

Decentralizing the SNAP program, tethering it to the US dollar, why not? 

Why should and how would food stamps operate like blockchain: 

  • Let’s say blockchain magically replaced the current SNAP benefit monitoring system.
  • Now, a network of computers would record all purchases made using EBT cards across the United States.
  • Doing so would consolidate program access, as a central system would monitor who is applying to receive food stamps and whether they qualify for this benefit.
  • Every transaction would be recorded in detail, including the kinds of products the consumers are purchasing. Theoretically, the types of foods that consumers could purchase could be expanded to included hot and prepared foods as the system would flag any purchases that are not allowed.
  • If the list of the types of foods that consumers can purchase expands, more stores would qualify to serve SNAP beneficiaries.
  • The system would be able to incorporate the geographic and persona (the kind of consumer) pricing data to adequately distribute benefits to each recipient.

Why this would beneficial to both sides:

  • Government 
    • Decreases time and costs of funding SNAP
    • Money originally spent on humans to monitor SNAP could go back into the program 
    • Increased data tracking of what consumers are buying
  • Citizens
    • Could increase the kinds of foods that can be bought 
    • Streamlines access to the program across all states
    • More benefits would be available as the government would no longer be paying as many people to monitor/approve participation

While this is still a very young idea, and there are great startups working on tackling some of the administrative barriers, it’s a good mental jog to think about all the possible technological applications that would improve the systems in today’s food industry!


We’ve aggregated additional research for your own interest and guidance. Enjoy!

Research:

Simple Federal Assistance Program Statistics 

Food stamp (SNAP) recipients are 36.2% White and 25.6% Black.

Participants in Special Supplemental Nutrition Program for Women, Infants and Children (WIC) program are 58.6% White and 20.7% Black.

Public housing is 32% White and 45% Black, and Medicaid is 40% White and 21% Black.

About SNAP

Supplemental Nutrition Assistance Program (SNAP)

The USDA’s website for SNAP.

Project Bread’s: gettingSNAP.org

An online resource to answer questions and help determine eligibility for SNAP.

Design Issues in USDA’s Supplemental Nutrition Assistance Program: Looking Ahead by Looking Back

A report summary from the Economic Research Service, this summary describes the current issues within SNAP.

The Very Short History of Food Stamp Fraud in America

A Time article walking through the history of Food Stamps and addressing claims from critics.

About Blockchain

Blockchain Explained

While this article addresses blockchain as it relates to Bitcoin, a cryptocurrency, it also provides an easily digestible read on how blockchain works.

What is blockchain? The complete guide

A more complex read on blockchain, focusing on “The much-hyped distributed ledger technology (DLT) has the potential to eliminate huge amounts of record-keeping, save money, streamline supply chains and disrupt IT in ways not seen since the internet arrived.”

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